Homeowners that still have equity in their homes have a good chance handling their debt problems. By refinancing your current mortgage for a larger amount to help you pay off or pay down some of the debt you have, it will free up cash on a monthly basis.
Is this a good option for you?
Each person's situation is different; however you should consider how this type of debt consolidation could save you money. For a lot of individuals, unsecured debts like credit card debts, personal loans and medical bills can be expensive and absolutely difficult to manage.
What's the risk?
One important thing to consider for anyone who is considering refinancing their debt through a mortgage is the risk you are taking. Unsecured debts are just that, unsecured. Creditors can't repossess anything if you can't pay. However when you refinance your mortgage to pay off your unsecured debt, this means that your home is now at risk if the debt cannot be paid. This is not what you want, so before considering utilizing your home to pay off debt, consider how well this type of risk fits with your agenda.
There are a number of reasons why refinancing debt can be a good thing.
• Mortgage loans are much lower in interest than unsecured debts, so you'd save a substantial amount of money in the long term in interest payments. If you are currently paying, between 18 to 25 percent in interest on credit card debt, paying 6 or so is a blessing.
• With this option, you boost your credit by paying off all of your other debts in full. You are making all of your debt payments in full.
• One monthly payment for your debts now, your mortgage.
Debt can be hard to handle but acquiring the knowledge of little tricks and tips can help out in the long run.